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Stipulated Final Judgment and Order for Permanent Injunction and

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Stipulated Final Judgment and Order for Permanent Injunction and Powered By Docstoc
					 Stephen L. Cohen , Esq.
 EricA. Wenger, Esq.
 Federal Trade Commssion
 600 Pennsylvana Ave. , NW
 Washigton, DC 20580
 202- 326- 3222; 326- 2310; 326- 3395 (fax)
 An Weintraub , Esq. , N. Y. Bar#AW 3080
 Federal Trade Commssion
 One Bowling Green, Suite 318
 New York, NY 10004
 212- 607- 02815; 607-2822 (fax)




                                 IN THE UNTED STATES DISTRICT COURT
                               FOR THE SOUTHERN DISTRICT OF NEW YORK


  FEDERA TRAE COMlSSION,
     Plaintif
                                                                           03                   v 10075
                                                                       Civil Action No.


 DOMAN REGISTRY OF AMRICA,                                             STIPULATED FIAL
 INC.                                                                  JUGMENT AN ORDER
                                                                       FOR PERMNT
    Defendant.                                                        INJUCTION
                                                                      CONSUMR REDRESS

         Plaintiff the Federal Trade Commssion ("FTC" or " Commssion ), has filed its

complait for pennanent inunction and other relief pursuant to Section 13(b) of the Federal

Trade Commssion Act ("FTC Act"),                     15.   US. C. 9 53(b), and the Truth In Lendig Act (" TllA"
15 US. C. ~g 1601           et seq.     chargig Defendant         Domai Registr of Amerca, Inc. (' 'PROA'' or

 Defendant") with violatig               Section 5 of      the FTC Act, 15 D. C. ~ 45 , and Section 166 of the

TILA , 15 D.        C. 9 1666(e), and Section 226.            12(e)   of Regulation Z , 12 C.   R. 9 226.   12(e).




                                                           Page 1 of 17
        The parties have agreed to the entry of this Stipulated Final Judgment and Order for

Permanent Injunction (“Order”) by this Court to resolve all matters of dispute between them in

this action.

        NOW, THEREFORE, Plaintiff Federal Trade Commission and Defendant DROA

having requested the Court to enter this Order,

        IT IS HEREBY ORDERED, ADJUDGED AND DECREED as follows:

                                            FINDINGS

        1.     This Court has jurisdiction over the subject matter and the parties.

        2.     Venue is proper as to all parties in the Southern District of New York.

        3.     The activities of Defendant are in or affecting commerce, as defined in the FTC

Act, 15 U.S.C. § 44.

        4.     The Complaint states a claim upon which relief may be granted against Defendant

under §§ 5(a)(1) and 13(b) of the FTC Act, 15 U.S.C. §§ 45(a)(1) and 53(b), and the TILA,

15 U.S.C. §§ 1601 et seq.

        5.     Defendant has waived any and all rights that may arise under the Equal Access to

Justice Act, 28 U.S.C. § 2412, amended by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996).

        6.     This Order is in addition to, and not in lieu of, any other civil or criminal

remedies that may be provided by law.

        7.     Plaintiff and Defendant waive all rights to seek appellate review or otherwise

challenge or contest the validity of this Order. Defendant further waives and releases any claim

it may have against the Commission, its employees, agents, and representatives.




                                           Page 2 of 17
       8.      The parties have agreed to settlement upon the following terms and conditions,

without adjudication of any issue of law or fact, and without Defendant admitting liability or any

wrongdoing for the allegations in the complaint. This settlement does not constitute discipline, a

judicial determination, judgment, or a finding of any kind by the Commission or this Court.

       9.      Entry of this Order is in the public interest.



                                              ORDER

                                            Definitions

       1.      “Domain name services” shall mean any service offered by Defendant for

registering, hosting, parking, reserving, renewing, or transferring domain names, including any

solicitation for any such services.

       2.      “Document” is synonymous in meaning and equal in scope to the usage of the

term in Federal Rule of Civil Procedure 34(a) and includes writings, drawings, graphs, charts,

photographs, audio and video recordings, computer records, and other data compilations from

which information can be obtained and translated, if necessary, through detection devices into

reasonably usable form. A draft or non-identical copy is a separate document within the

meaning of the term.

                           PROHIBITED BUSINESS ACTIVITIES

                                                  I.

                    INJUNCTION AGAINST MISREPRESENTATIONS

       IT IS HEREBY ORDERED that, in connection with the advertising, marketing,

promotion, offering for sale, selling, distribution, or provision of any domain name services,


                                            Page 3 of 17
Defendant, its successors, assigns, officers, agents, servants, and employees, and those persons

in active concert or participation with it who receive actual notice of this Order by personal

service or otherwise are hereby permanently restrained and enjoined from making or from

assisting in the making of, expressly or by implication, orally or in writing, any false or

misleading statement or representation of material fact, including but not limited to any

representation that the transfer of a domain name registration is a renewal.



                                                 II.

       IT IS FURTHER ORDERED that, in any written or oral communication where

Defendant makes any representation that a domain name service is expiring or requires renewal,

Defendant, its successors, assigns, officers, agents, servants, and employees, and those persons

in active concert or participation with it who receive actual notice of this Order by personal

service or otherwise are hereby permanently restrained and enjoined from failing to disclose, in a

clear and conspicuous manner, in advance of receipt of any payment for services:

       A.      Any cancellation or processing fees imposed prior to the effective date of any

               transfer or renewal; and

       B.      Any limitations or restrictions on cancelling a request for domain name services.



                                                III.

                                  COMPLIANCE WITH TILA

       IT IS FURTHER ORDERED that, in connection with the advertising, marketing,

promotion, offering for sale, selling, distribution, or provision of any domain name services,


                                           Page 4 of 17
Defendant, its successors, assigns, officers, agents, servants, and employees, and those persons

in active concert or participation with it who receive actual notice of this Order by personal

service or otherwise are hereby permanently restrained and enjoined from failing to comply with

§ 166 of the TILA, or § 226.12(e) of Regulation Z, 12 C.F.R. § 226(e), or as those Sections of

the TILA or Regulation Z may hereafter be amended.



                                    CONSUMER REDRESS

                                                 IV.

       IT IS FURTHER ORDERED that Defendant shall provide consumer redress as

follows:

       A.      Within thirty (30) days of entry of this Order, Defendant shall provide to any

consumer who cancelled a transfer request prior to the completion of the transfer a full refund of

any monies paid, including any cancellation or administration fees. Defendant shall mail the

refund in the form of a check drawn on U.S. funds to the consumer’s last known address, along

with a notice in the form that is attached to the Order as Attachment A;

       B.      Within thirty (30) days of entry of this Order, Defendant shall provide redress to

any current customer who has not yet renewed a domain name registration with Defendant, or

any former customer of Defendant who transferred a domain name to Defendant, who responded

to a solicitation that is substantially similar in form or content to Attachment D (“eligible

consumers”) in accordance with the following terms and conditions:

               1.      Defendant shall send an email notice/claim form in the form attached to

                       this Order as Attachment B to all eligible consumers;


                                           Page 5 of 17
2.   The email notice/claim form shall be sent to eligible consumers at their

     last known email address(es);

3.   The email notice/claim form shall offer eligible consumers an opportunity

     to transfer their domain name registrations to a different registrar and be

     reimbursed $6.00 by Defendant for each completed transfer;

4.   Defendant shall give recipients ninety (90) days to initiate the transfer or

     return the email notice/claim form to Defendant;

5.   Defendant shall use all reasonable commercially available means to obtain

     updated email addresses for any returned emails with fifteen (15) days of

     receipt of such returned email and shall resend any such notices within ten

     (10) days of obtaining a new email address for the recipient. Defendant

     shall give eligible consumers who receive a resent email notice/claim form

     under this provision ninety (90) days to respond;

6.   For ninety (90) days following the entry of this Order, Defendant shall

     maintain on its homepage, www.droa.com, a hyperlink to a notice/claim

     form in the form that is attached to this order as Attachment B;

7.   Defendant shall mail to eligible consumers a check for $6.00 within seven

     (7) days of Defendant’s receiving notification from eNom that an eligible

     consumer successfully transferred the registration to another registrar.

     Defendant shall mail refunds in the form of a check drawn on U.S. funds

     to the eligible consumer’s last known address, along with a notice in the

     form attached to this Order as Attachment C; and


                         Page 6 of 17
       C.      No later than one hundred and eighty (180) days from the entry of this Order,

Defendant shall provide the FTC with a report on the consumer redress program provided by this

Part, including:

               1.      The name, address, and refund amount for each consumer;

               2.      The total number of consumers to whom email notices were sent; the

                       number responding; the number responding who never completed a

                       transfer; the number ineligible for redress and the reasons why; and

               3.      The number of consumers transferred to another registrar; and the number

                       of transfers that were not completed and the reasons why.



                                 GENERAL REQUIREMENTS

                                                 V.

                             RECORD KEEPING PROVISIONS

       IT IS FURTHER ORDERED that, for a period of four (4) years from the date of entry

of this Order, in connection with any business engaged in advertising, marketing, promoting,

offering for sale, selling, distributing, or providing any domain name services, or in assisting

others engaged in such business, Defendant and its agents, employees, officers, corporations,

successors, and assigns, and those persons in active concert or participation with them who

receive actual notice of this Order by personal service or otherwise, are hereby restrained and

enjoined from failing to retain the following records:




                                           Page 7 of 17
       A.      Accounting records that reflect the cost of goods or services sold, revenues

generated, and the disbursement of such revenues, to the extent such records are used in the

ordinary course of business or as required under applicable law;

       B.      Personnel records accurately reflecting: the name, address, and telephone number

of each person employed in any capacity by such business, that person's job title or position; the

date upon which the person commenced work; and the date and reason for the person's

termination, if applicable;

       C.      Customer files containing the names, addresses, phone numbers, dollar amounts

paid, quantity of items or services purchased, and description of items or services purchased, to

the extent such information is obtained in the ordinary course of business;

       D.      Complaints and refund requests (whether received directly, indirectly, or through

any third party) and any responses to those complaints or requests; and

       E.      Copies of all sales scripts, training materials, advertisements, or other marketing

materials, to the extent such records are used in the ordinary course of business.



                                                VI.

                               COMPLIANCE MONITORING

       IT IS FURTHER ORDERED that, for the purpose of monitoring and investigating

compliance with any provision of this Order:

       A.      Within thirty (30) days of receipt of written notice from a representative of the

Commission, Defendant shall submit additional written reports, sworn to under penalty of

perjury; produce documents for inspection and copying; or appear for deposition;


                                           Page 8 of 17
       B.      In addition, the Commission is authorized to monitor compliance with this Order

by all other lawful means, including but not limited to the following:

               1.     Obtaining discovery from any person, without further leave of court, using

                      the procedures prescribed by Fed. R. Civ. P. 30, 31, 33, 34, 36, and 45;

               2.     Posing as consumers and suppliers to Defendant or to Defendant’s

                      employees, or any other entity managed or controlled in whole or in part

                      by Defendant without the necessity of identification or prior notice;

Provided that nothing in this Order shall limit the Commission’s lawful use of compulsory

process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1, to obtain any

documentary material, tangible things, testimony, or information relevant to unfair or deceptive

acts or practices in or affecting commerce (within the meaning of 15 U.S.C. § 45(a)(1)); and

       C.      Defendant shall permit representatives of the Commission to interview any

employer, consultant, independent contractor, representative, agent, or employee who has agreed

to such an interview, relating in any way to any conduct subject to this Order. The person

interviewed may have counsel present.



                                               VII.

                      COMPLIANCE REPORTING BY DEFENDANT

       IT IS FURTHER ORDERED that, in order that compliance with the provisions of this

Order may be monitored:

       A.      For a period of four (4) years from the date of entry of this Order, Defendant shall

notify the Commission of any proposed change in corporate structure that may affect compliance


                                          Page 9 of 17
obligations arising under this Order, including but not limited to a dissolution, assignment, sale,

merger, or other action that would result in the emergence of a successor corporation; the

creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices

subject to this Order; the filing of a bankruptcy petition; or a change in the corporate name or

address, at least five (5) days prior to such change, provided that, with respect to any proposed

change in the corporation about which Defendant learns less than thirty (30) days prior to the

date such action is to take place, Defendant shall notify the Commission as soon as is practicable

after obtaining such knowledge;

       B.       One hundred eighty (180) days after the date of entry of this Order, Defendant

shall provide a written report to the FTC, sworn to under penalty of perjury, setting forth in

detail the manner and form in which Defendant has complied and is complying with this Order.

This report shall include, but not be limited to:

                1.     Any changes required to be reported pursuant to Paragraph A above;

                2.     A copy of each acknowledgment of receipt of this Order obtained by

                       Defendant pursuant to Part VIII;

       C.       For the purposes of this Order, Defendant shall, unless otherwise directed by the

Commission's authorized representatives, mail all written notifications to the Commission to:

                                       Associate Director
                                Division of Marketing Practices
                            Federal Trade Commission, Room 238
                           6th Street & Pennsylvania Avenue, N.W.
                                   Washington, D.C. 20580
            RE: FTC v. Domain Registry of America, Civil Action No.                        ;
and
       D.       For purposes of the compliance reporting required by this Part, the Commission is

authorized to communicate directly with Defendant’s in-house counsel.

                                           Page 10 of 17
                                                VIII.

                                  DISTRIBUTION OF ORDER

        IT IS FURTHER ORDERED that, for a period of four (4) years from the date of entry

of this Order, Defendant shall deliver a copy of this Order to all principals, officers, directors,

and employees serving in a management capacity, or having supervisory responsibility for

responding to consumer complaints or inquiries or for sales or marketing of domain name

services, and shall secure from each such person a signed and dated statement acknowledging

receipt of the Order. Defendant shall deliver this Order to such current personnel within thirty

(30) days after the date of service of this Order, and to new personnel within thirty (30) days

after the person assumes such position or responsibilities.



                                                 IX.

                     ACKNOWLEDGMENT OF RECEIPT OF ORDER

       IT IS FURTHER ORDERED that Defendant, within five (5) business days of receipt of

this Order as entered by the Court, must submit to the Commission a truthful sworn statement

acknowledging receipt of this Order.




                                           Page 11 of 17
                                               X.

                             RETENTION OF JURISDICTION

       IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for

purposes of construction, modification and enforcement of this Order.



       The parties, and their respective counsel, hereby consent to the terms and conditions of

the Consent Decree as set forth above and consent to the entry thereof.



FOR DEFENDANT



Daniel Klemann
President, Domain Registry of America, Inc.



Charles L. Rosenzweig, Esq.
Counsel for Domain Registry of America
Rand Rosenzweig Smith Radley Gordon & Burstein LLP
605 Third Ave.
New York, NY 10156
212-687-7070




                                         Page 12 of 17
FOR THE FEDERAL TRADE COMMISSION



Stephen L. Cohen



Eric A. Wenger
Federal Trade Commission
600 Pennsylvania Ave., N.W.
Washington, D.C. 20580
202-326-3222; 326-2310 (phone); 202-326-3295 (fax)



Ann Weintraub
NY Bar # AW 3080
Federal Trade Commission
One Bowling Green, Suite 318
New York, NY 10004
212-607-02815; 607-2822 (fax)




      SO ORDERED, this ___ day of _____________, 2003.




                    United States District Judge
                    Southern District of New York




                                      Page 13 of 17
                                      ATTACHMENT A

                                     REFUND NOTICE

                                                                  Date

Name
Address

               RE:    [domain names and extensions]

Dear [Name]:

       As part of a settlement between the Federal Trade Commission (FTC) and Domain
Registry of America (DROA), we are pleased to provide you with the enclosed refund check.

        In its complaint, the FTC alleged that DROA failed to clearly and conspicuously disclose
its cancellation and administrative fees. DROA denies the allegation. You can read the
complaint and final settlement at www.ftc.gov.

      If you have any questions, please call DROA at [number] or the FTC at 1-877-FTC-
HELP (382-4357).


Sincerely,


Enclosure




                                         Page 14 of 17
                                       ATTACHMENT B

                              EMAIL NOTICE/CLAIM FORM

SUBJECT LINE: Important Notice Concerning Your Domain Registration

        As part of a settlement between the Federal Trade Commission1 and Domain Registry of
America2, DROA has agreed to offer you the opportunity to switch your domain registration
from DROA to a different registrar, and for you to receive $6.00 for each registration you
transfer.

        In its complaint, the FTC alleged that DROA misled consumers into transferring their
domain name registrations from their then-current registrars to DROA. DROA denies the
allegation.

       If you would like to switch your registration from DROA to another registrar, you must
contact the new registrar to arrange for the transfer, and pay the new registrar its fee. DROA
cannot arrange the transfer for you. For a list of ICANN-accredited registrars, visit
www.icann.org/registrars/accredited-list.html. Once DROA confirms that you have successfully
completed your transfer, we will send you a check for $6.00 for each registration transferred.

       If you would like to send us a copy of your transfer request, you may mail a copy of this
form to [insert DROA’s address] or by email to [insert email address as hyperlink for web
version]. If you have any questions, please contact [insert contact] at DROA or the FTC at 1-
877-FTC-HELP (382-4357).




   1
       Hyperlink to FTC press release announcing settlement for notice posted on Web site.
   2
       Hyperlink to DROA’s press release regarding settlement for notice posted on Web site.

                                         Page 15 of 17
                                      ATTACHMENT C

                                   $6.00 REFUND NOTICE

                                                                   Date

Name
Address

               RE:    [domain names and extensions]

Dear [Name]:

        The Federal Trade Commission (FTC) recently entered into an agreement with Domain
Registry of America (DROA) to settle allegations that DROA transferred domain names without
consumers’ authorization. As part of the agreement, DROA has agreed to reimburse you for part
of the cost of switching your domain registration to another registrar. Our records indicate that
you have transferred the domain registration(s) referenced above. The enclosed check
reimburses you $6.00 for each registration you transferred.

      If you have any questions, please contact DROA at [number] or the FTC at 1-877-FTC-
HELP (382-4357).


Sincerely,


Enclosure




                                         Page 16 of 17
  ATTACHMENT D

DROA SOLICITATION




   Page 17 of 17

				
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